The U.S. air traffic control system has fallen woefully behind most of the rest of the world, but we may finally be on the cusp of a promising reform decades in the making.

In testimony before the House Transportation and Infrastructure Committee last month, Reason Foundation Director of Transportation Policy Robert Poole identified three main problems with our existing system. First, the Federal Aviation Administration’s funding is volatile, subject to the caprices of Congress, and hasn’t kept up with technology and large-scale capital improvement needs. Second, the governance structure suffers from too many government agencies micromanaging the system and an FAA with an inherent conflict of interest, since it is responsible for both providing services and conducting investigations of those services. And third, progress and innovation have been stifled by a risk-averse culture more interested in protecting the status quo.

One solution, which has earned support from the White House and within Congress, is to replace the FAA’s taxpayer-funded Air Traffic Organization with a federally chartered nonprofit corporation sustained by user fees. This would provide more flexibility and funding stability, including the opportunity to issue revenue bonds to finance long-term capital investments. The structure would make it similar to organizations like the American Red Cross, U.S. Olympic Committee, federal credit unions or rural electricity and telecommunications cooperatives, Poole noted.

Under the current system, “ATC is a high-tech service business that in the U.S. is trapped in a tax-funded regulatory bureaucracy,” Poole told us. “The natural incentive of a bureaucracy is to try to make sure that it looks good, and that’s not what you want.”

The nonprofit corporation model would much better align incentives to serve customers, from airlines and private pilots to, ultimately, commercial airline passengers. Crucially, it would also depoliticize funding and operations decisions.

“It creates a real customer focus,” Poole said. The existing system, by contrast, “does not put the customers in charge; it does not put their interests first” because “the FAA’s real customer is Congress.”

The idea is not so radical. In fact, more than 60 countries have adopted a form of “corporatization” over the past 30 years, leaving the U.S. as one of the relative few to do things the old way. And we do not have to look far for a positive example. Nav Canada, from our neighbor to the north, which operates the world’s second-largest air traffic system, adopted a similar format 20 years ago. In that time, its air traffic control fees have fallen 40 percent while its productivity has increased. The FAA’s unit cost of service, meanwhile, has increased by 66 percent during that time, even as flight operations have declined. Today, Nav Canada’s cost per flight hour is 26 percent lower than the FAA’s.

It is clear that our air traffic control governance structure is as antiquated as much of the technology in use. Removing anti-competitive barriers and government interventions, from allowing for greater privatization of airports to adopting market-based pricing of gate slots and runway access, would improve the U.S. air transportation system even more, but the “corporatization” of air traffic control represents a positive, and probably necessary, first step.

— The Orange County Register,

June 21